UPM to Begin Installation of New Specialty Paper Machine in China

UPM's Changshu mill in China currently has a total production capacity of about 920,000 tonnes per year of woodfree coated and uncoated papers.

Feb. 28, 2014 - UPM said that it's beginning construction of a third production unit at its Changshu mill in China with improved capital efficiency. The new machine will have a an annual capacity to produce 360,000 tonnes of speciality papers and labelling materials.

The Changshu project was first announced August 7, 2012.

According to UPM, "The investment scope has been moderately revised by specifying more focused infrastructure investments as compared to the original scope. Instead of constructing a new power plant, UPM will upgrade existing boilers providing opportunity to consider more environmentally effective fuels or solutions for the mill’s energy supply in the future. The mill also aims at utilizing existing facilities more effectively instead of building new infrastructure."

UPM said the revised plan calls for an investment of EUR 277 million instead of the original EUR 390 million.

“We have set ourselves clear targets for focused growth initiatives over the next three years in biofuels, speciality papers in Asia, label materials and pulp production," said Jussi Pesonen, UPM's CEO and President. "With these initiatives we are targeting an additional EUR 200 million EBITDA when in full operation. The return on the Changshu investment is attractive and is expected to bring a significant contribution to our EBITDA growth target."

Kim Poulsen, Executive Vice President, UPM Paper Asia, commented, “The Changshu investment is targeted to serve growing end uses in Asia markets with wide range of release liner materials and speciality products. This investment is implemented in our existing platform in Changshu, and will give us competitive production cost base through local synergies. The business fundamentals for the investment continue to be positive as both release liner materials and uncoated woodfree office and speciality papers enjoy a healthy demand outlook in Asia.”

UPM noted that the annual growth of labelling materials is expected to be globally ca. 4 %. More than half of the global growth takes place in Asia with annual growth over 8%. The most attractive growth markets are China, Southeast Asia and India.

The new machine is schedule to start up at the end of 2015.